Where have China's big group-buying websites gone?

2014-10-27 06:52

By (chinadaily.com.cn)

Just five years ago, when you wanted to watch a movie you went into a cinema and bought a ticket. These days, however, you can use your Internet-connected mobile phone to group-buy a virtual ticket, which can be exchanged for a real ticket.

If that seems easy and inexpensive, it is, and the ease and possible profit margin was not lost on eagle-eyed investors and others. The situation today is something of an economic mystery.

From Sept 23 to 5:30 pm, Oct 21, a total of 17,085 people group-bought their movie tickets, together with popcorn and a bottle of fruit juice, for 31 yuan ($5) on nuomi.com, a Chinese group-buying website. The original price for a single ticket in the cinema on Fuxing Road, Haidian district, Beijing is 90 yuan (almost $15).

The arrangement, and many like it, seemed like a win-win situation. Consumers saved money, while goods and service providers, such as restaurants, hotels and hairdressers, were able to capitalize on their unused capacity, promote their brand, or expand their service area.

South Beauty, a high-end restaurant chain hit hard by China's frugality campaign, group-sold 12,165 "dinners for four people" at a price of 298 yuan on the group-buying sub-site of Dianping.com, a website where people post their reviews for restaurants, from April 11 to 5:30 pm, Oct 21. The original price was 1,234 yuan.

Tuan800.com, a group-buying navigation site, which also releases regular data analyses, provides a general picture of the industry. According to the website, a total of 120 million people in the Chinese mainland group-bought something or some service in August, up 109 percent year-on-year. Tuan800 added that the value for all these group-buying deals for this single month reached 7.7 billion yuan, up 108 percent year-on-year.

But just as group-buying seemed ready to enter daily life for good, Chinese group-buying websites - once the darlings of venture capitalists, now face an unpredictable future with many being gobbled up by larger companies and acquired, others vanishing from the Internet all together.

The following examples beg the question: what happened to China's major group-buying websites?

October 2014, Lashou.com

Sunpower Group announced on Oct 19 it had acquired Lashou.com, one of China's earliest group-buying websites, but has not disclosed the deal price, according to caixin.com.

Sunpower, headquartered in Nanjing, capital of South China's Jiangsu province, has five business focuses, including real estate, health care and retail. 　Zou Yan, spokesman for Sunpower, told caixin.com that the acquisition of Lashou.com was to help improve Sunpower's O2O (online-to-offline) platform.

Lashou.com, which went online in March 2010, received a total of $166 million yuan from investors between April 2010 and April 2011, according to Tuan800.com. Lashou even tried to go public, the first Chinese group-buying website to launch an IPO in the United States, and was valued at $1.1 billion yuan, but it failed at last.

Group-buying deals worth 300 million yuan were made on Lashou.com in the first eight months of this year, down 1.77 percent year-on-year, according to Tuan800..

The company might now have a market share of only five percent, according to a survey cited by caixin.com.